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Indian Govt launches Open Acreage Licensing; eases oil, gas exploration regime
The government liberalised the regime for oil and gas exploration by announcing Open Acreage Licensing process that allows companies to carve their own areas for hydrocarbon hunting.
Speaking at event of unveiling the National Data Repository, Minister of State (Independent Charge) for Petroleum and Natural Gas, Dharmendra Pradhan said, “As much as 52 per cent of India’s
sedimentary basins are still unappraised and the last seismic data acquisition of the unappraised sedimentary basins was undertaken by the government nearly 25 years ago.”
OAL will be under the Hydrocarbon Exploration and Licensing Policy (HELP).
“We realised that the lack of updated G&G (geological and geophysical) data for the Indian Sedimentary Basin has been hampering our E&P (Exploration and Production) force. That’s why, the National
Seismic Program was started last year,” he added.
New policies
Pradhan said that the government is also coming up with new policies for Enhanced Oil Recovery, Production Enhancement Contracts, and a Shale Oil & Gas Policy for NELP and Pre-NELP blocks under the next
set of PSC Reforms.
The next round of bidding Round under the Discovered Small Field policy is also on the crosshairs of the government.
Atanu Chakraborty, Director-General of the Directorate General of Hydrocarbons, told reporters on the sidelines of the launch that the first window for submitting bids under the OAL will be from July 1 to
November 15 this year.
The finalisation of block and invitation of bids will take place on December 15. The bid submission window will be open for 10 weeks from then and the bid evaluation and declaration of bid winner will be done
in another 10 weeks.
When asked what the criteria for awarding will be if some acreage gets a single bid, Chakraborty said, “When someone identifies the acreage, a revenue commitment is also submitted for it. The bids will be conducted
based on those revenue commitments under the revenue sharing contract.”
Scale up oil exploration
P. Elango
We import 75 per cent of our oil demand; yet we fail to tap significant unexplored opportunities for exploration and production.
Thanks to an elephant and a British geologist, India discovered its first oil in the jungles of Assam in 1889, much before any member of OPEC could do it. But that’s history.
The reality today is over 75 per cent of our sedimentary basins are yet to be categorised as “moderate-to-well explored” even as we import over 75 per cent of our oil demand by spending a whopping $134 billion during FY 2011-12. Such high import dependence has led to high trade deficit and widening of current account deficit (CAD). It’s a vicious cycle that can only be broken through a bold vision and a swift set of actions.
Every challenge represents an opportunity. India presents significant unexplored opportunities for the exploration and production (E&P) industry. So far only 73 billion barrels of oil and oil equivalent gas could be established through exploration, out of 205 billion barrels of prognosticated hydrocarbon resources. Thus, about 133 billion barrels of prognosticated resources remain to be unlocked through exploration. The size of the prize when we move the 65 per cent of prognosticated hydrocarbon resources to “in-place volumes” from “yet-to-find” category could be significant.
On an average, India drills about 200 exploratory wells every year while the US drills about 2,000. Factoring in the geological risks, this pace needs to be accelerated to identify and drill out each prospect in the 26 sedimentary basins that provide the hydrocarbon base for India spread over 3 million sq.km.
The Ministry of Petroleum & Natural Gas recently set the ball rolling with a vision to reduce oil imports by 50 per cent (2020), 75 per cent (2025), and 100 per cent (2030) and a roadmap is being evolved. The first significant step in this direction is the policy decision to allow exploration in all producing blocks, even as the industry awaits further procedural clarity.
The Hydrocarbon Vision 2025 aims at 100 per cent exploration coverage of sedimentary basins by 2025. To achieve this, we should scale up our exploration efforts to move 50 per cent of the sedimentary basin to the ‘moderate-to-well explored’ category in the next five years by:
Providing an enabling policy framework and fiscal terms that are clear, certain and internationally competitive to attract the risk capital and technology.
Establishing Open Area Licensing Policy (OALP) regime swiftly to enable industry to move rapidly to explore attractive blocks rather than waiting for bid rounds.
Revamping regulatory framework to global standards built on principles of self governance, trust and partnership.
National and international experience suggests that higher domestic production has a transformational impact on the host governments. In our own country, Rajasthan is the most recent example.
As per the Rajasthan Budget Study 2013-14, revenue from the petroleum sector now constitutes more than 40 per cent of the total non-tax revenue of the State government from just 0.2 per cent in 2008-09.
The petroleum sector is estimated to contribute Rs 5,500 crore to the State government’s non-tax revenue, primarily because of oil production from the Barmer Basin. Oil discovery and the resultant higher revenues from the sector have helped the State to present a more balanced budget, enabling large fund allocation to social and economic development projects.
From Discovery to Delivery
Over 50 per cent of the time from discovery-to-delivery is wasted in the lengthy “I don’t trust you” approval process — a non-value adding component in any project development.
As a result, out of 117 NELP discoveries as of April 2012, development plan has been approved only for 11 per cent of the discoveries, and very few discoveries are under production, even as we spend Rs 1,800 crore in importing oil every day.
As we seek to scale up exploration programme, there is a need to simultaneously fast-track the project development. We need to set a goal to reduce the cycle time from discovery-to-delivery. In oil and gas sector there is no equipment or facility that requires more than 18 months lead time to commission and no discovered barrel of oil in India is going to cost more to develop than its imported price.
The solution lies in adopting an integrated field development plan that is dynamic and looks at the life cycle of the development of a block vis-à-vis the current process of individual field development plan for a discovery. Controls can be exercised through annual work programme and budget and its amendments on merits. This can significantly shorten the discovery-to-delivery cycle, contributing to domestic production barrel by barrel, as every barrel counts when it saves $100/barrel of precious foreign exchange to a nation whose current account deficit is $78 billion.
Strengthening Governance
Scaling up exploration efforts and fast-tracking discovery-to-delivery demands strengthened governance framework for the E&P sector. This calls for a fully equipped regulator with a permanent, internationally experienced cadre to manage our nation’s oil and gas resource base. At the estimated recoverable reserve base of 2,041 MMT of O+OEG its value is more than $1 trillion, which is almost equivalent to the market capitalisation of all listed companies in India. If a regulator of SEBI stature is required to professionally manage the market, we need to look at how we strengthen and elevate the upstream oil and gas regulator DGH as an institution that promotes risk investment in exploration, facilitates fast-track development, promotes energy security and protects the national interest.
Norway, on which India’s E&P regulatory framework was originally modelled, is an appropriate example to follow. That country has provided statutory powers to a technically strong regulator — the Norwegian Petroleum Directorate (NPD). Well-codified practices, swift and transparent decision making, system of deemed approvals after a set timeline, are hall marks that make NPD an industry benchmark for the governance of E&P activities. And this is what has enabled Norway to increase production over the years and run a sovereign fund of $700 billion that is primarily contributed by a vibrant oil and gas sector providing a high quality of life to its citizens.
The price we will pay, if we do not act now, is clear; we will end up transferring over $1.5 trillion of national wealth to oil exporting countries.
To transform we need to, as a mission, step up and scale up exploration, fast-track discovery-to-delivery cycle time and strengthen governance to facilitate economic development. As the prize could be large, this journey to realise the Hydrocarbon Vision will surely be exciting, if we get set and move!
(The author is CEO of Cairn India.)
Source: http://www.thehindubusinessline.com/opinion/scale-up-oil-exploration/article4505416.ece
19 Oct 2010: NELP-IX offers 34 blocks including eight deep-sea, seven shallow water and 19 on-land blocks (including small blocks). Of these, 19 are in the new areas while the rest are recycled blocks in relinquished areas.The last date for bidding for blocks is March 18, 2011.
April 09: Indian Govet is offering 70 Blocks for Oil & Gas Exploration under NELP VIII, of which 24are iin deep water, 28 in shallows and 18 on land. Of the 24 in deep water, 18 are in Offshore Andamans
Under the Coal Bed Methan (CBM) IV 10 blocks are on offer
Nov 08: Of the 57 Blocks offered under NELP VII, 45 were bid for and 44 are to be awarded for exploration of Oil & Gas off India
Dec 07: Indian Govt is offering 57 Oil & Gas blocks in the 7th round of New Exploration Licensing Policy (NELP)
They include 19 deep water, 9 shallow water and 29 onland blocks
Blocks covering areas upto 200sqkm is open to small players with a
waiver of technical capability criteria
19 Sep 2006
Under India's New Exploration Licensing Policy 165 bids have been received for 52 blocks
India's Liberalised Industrial Policy
Objectives
of the Industrial Policy of the Government are -
to maintain a sustained growth in productivity;
to enhance gainful employment;
to achieve optimal utilisation of human resources;
to attain international competitiveness and
to transform India into a major partner and player in the global arena.
Policy
Focus is on -
Deregulating Indian industry;
Allowing the industry freedom and flexibility in responding to market forces
and
Providing a policy regime that facilitates and fosters growth of Indian industry.
Policy Measures
Some
of the important policy measures announced and procedural simplifications
undertaken to pursue the above objectives are as under:
i) Liberalisation of Industrial Licensing Policy
The list of items requiring compulsory licensing is reviewed on an ongoing basis.
At
present, only six industries are under compulsory licensing mainly on account
of
environmental, safety and strategic considerations. Similarly, there are only
three
industries reserved for the public sector. The lists of industries reserved
for the
public sector and of items under compulsory licensing are at Appendix III and
IV
respectively.
ii) Introduction
of Industrial Entrepreneurs' Memorandum(IEM)
Industries not requiring compulsory licensing are to file an Industrial
Entrepreneurs' Memorandum (IEM) to the Secretariat for Industrial Assistance
(SIA).
No industrial approval is required for such exempted industries. Amendments
are also
allowed to IEM proposals filed after 1.7.1998.
iii)
Liberalisation of the Locational Policy
A significantly amended locational policy in tune with the liberlised licensing
policy is in place. No industrial approval is required from the Government for
locations not falling within 25 kms of the periphery of cities having a population
of more than one million except for those industries where industrial licensing
is
compulsory. Non-polluting industries such as electronics, computer software
and
printing can be located within 25 kms of the periphery of cities with more than
one
million population. Permission to other industries is granted in such locations
only
if they are located in an industrial area so designated prior to 25.7.91. Zoning
and
land use regulations as well as environmental legislations have to be followed.
iv) Policy
for Small Scale Industries
Reservation of items of manufacture exclusively for the small scale sector forms
an
important focus of the industrial policy as a measure of protecting this sector.
Since 24th December 1999, industrial undertakings with an investment upto rupees
one
crore are within the small scale and ancillary sector. A differential investment
limit has been adopted since 9th October 2001 for 41 reserved items where the
investment limit upto rupees five crore is prescribed for qualifying as a small
scale unit. The investment limit for tiny units is Rs. 25 lakhs.
749 items
are reserved for manufacture in the small scale sector. All undertakings
other than the small scale industrial undertakings engaged in the manufacture
of
items reserved for manufacture in the small scale sector are required to obtain
an
industrial licence and undertake an export obligation of 50% of the annual
production. This condition of licensing is, however, not applicable to those
undertakings operating under 100% Export Oriented Undertakings Scheme, the Export
Processing Zone (EPZ) or the Special Economic Zone Schemes (SEZs).
v) Non-Resident
Indians Scheme
The general policy and facilities for Foreign Direct Investment as available
to
foreign investors/company are fully applicable to NRIs as well. In addition,
Government has extended some concessions specially for NRIs and overseas corporate
bodies having more than 60% stake by the NRIs. These inter-alia includes (i)
NRI/OCB
investment in the real estate and housing sectors upto 100% and (ii) NRI/OCB
investment in domestic airlines sector upto 100%.
NRI/OCBs
are also allowed to invest upto 100% equity on non-repatriation basis in
all activities except for a small negative list. Apart from this, NRI/OCBs are
also
allowed to invest on repatriation/non-repatriation under the portfolio investment
scheme.
vi) Electronic
Hardware Technology Park (EHTP)/Software Technology Park (STP) scheme
For building up strong electronics industry and with a view to enhancing export,
two
schemes viz. Electronic Hardware Technology Park (EHTP) and Software Technology
Park
(STP) are in operation. Under EHTP/STP scheme, the inputs are allowed to be
procured
free of duties.
The Directors
of STPs have powers to approved fresh STP/EHTP proposals and also
grand post-approval amendment in repsect of EHTP/STP projects as have been given
to
the Development Commissioners of Export Processing Zones in the case of Export
Oriented Units. All other application for setting up projects under these schemes,
are considered by the Inter-Ministerial Standing Committee (IMSC) Chaired by
Secretary (Information Technology). The IMSC is serviced by the SIA.
vii)
Policy for Foreign Direct Investment (FDI)
Promotion of foreign direct investment forms an integral part of India's economic
policies. The role of foreign direct investment in accelerating economic growth
is
by way of infusion of capital, technology and modern management practices. The
Department has put in place a liberal and transparent foreign investment regime
where most activities are opened to foreign investment on automatic route without
any limit on the extent of foreign ownership. Some of the recent initiatives
taken
to further liberalise the FDI regime, inter alia, include opening up of sectors
such
as Insurance (upto 26%); development of integrated townships (upto 100%); defence
industry (upto 26%); tea plantation (utp 100% subject to divestment of 26% within
five years to FDI); Encenhancement of FDI limits in private sector banking,
allowing
FDI up to 100% under the automatic route for most manufacturing activities in
SEZs;
opening up B2B e-commerce; Internet Service Providers (ISPs) without Gateway
The Department has also strengthened investment facilitation measures through
Foreign Investment Implementation Authority (FIIA).
8th May 2003
In the Fourth round of Explortion Licensing Policy, 24 Oil & Gas exploration blocks have been put out for Bids by the government. 11 are on land, 12 in Deepwater & 1 in shallow water.
Of these, 8 deepwater blocks are off the West coast and 4 off East coast including TWO highly prospective blocks off Andaman islands without any participation restrictions in bidding by foreign firms and neighbouring countries.
18th Oct 2002
Indian Central Govt has increased grant assistance to riverine States for developing waterways from 50% to 90%; the balance 10% will be provided by the States. Notifications for providing tax exemptions to inland water transporation projects, reduced Customs duty on certain equipment and enhanced depreciation for Inland vessels have been issued. Assistance from ADB &WB are being sought for Inland water Transport sector.
18th Sep 2002
INDIAN GOVT IS PLANNING TO PROVIDE 30% SUBSIDY TO EXPORT ORDERS FOR SHIPYARDS WHETHER PUBLIC OR PRIVATE YARDS
16th Sep 2002
TOWARDS FULL CONVERTIBILITY OF RUPEE?!
Since last week a host of restrictions are being removed: Premature closure of foreign currency loans......more funds in the market, rates coming down....
ECB (External commercial Borrowings) full pre-payment permitted and these funds CAN BE USED FOR REALTY BIZ.
If anyone has appetitie for any specific portfolio in India, this is the time to start planning !
The 26% cap on foreign equity (in IRDA Act viz: Insurance Regulatory & Development Authority) is proposed to be deleted as the first step towards raising the foreign investment limit in the Insurance sector.
It has long term implications as it would facilitate along with forex equity and FDIs, risk management of the international calibre and capacity.
20th Oct 2001
Indian Public Sector exports heretofore under mandatory C&F/CIF shackles have been released from these restrictions. However, such imports continue to be under FOB/FAS diktat.
4th July 2001:
The deadline for Coal powered Power plants to use Coal with ash content less than 34% has been extended by an year to June 2002
19th June 2001:
India's Ministry of Shipping has removed the last vestiges of controls by allowing acquisition of ships without Price Reasonabless Certfificate and Technical Clearance, but age limit up to 25 years is retained.
Along with 100% Foreign Direct Investment recently permitted in Indian Shipping, these open up the possibilities for achieving growth targets as planned.
100% Foreign Direct Investment in Indian Shipping is now allowed. Earlier only 74% was permitted through automatic approval route
India's Fiscal budget for 2001-2001:
Depreciation rate increased to 25% for Ocean going vessels (from 20%) and Inland-water vessels (from 10%)
Tax holiday extended for Ports, Inland ports and Waterways for 10years which can be availed during the first 15 years
Creation of Infrastructure facilities along National waterways on BOT (Build, Operate & Transfer) basis for 30 years, is on offer to private
investors.
Through IWAI (inland Waterways Authority of India) up to 40% grants will be provided by the Government for BOT projects.
New vessel building subsidy of 30% for Inland water vessels built in India is proposed.
Depreciation rate for all vessels operating in Inland Water Transport (IWT) is increased from 10 to 20%.
100% tax exemption for the first 5years and 30% tax exemption within the next five years (to be availed within a block of 20 years) are also available.
25 new Blocks located in proven
and promising sedimentary basins are on offer for Exploration of Oil & Gas under
India's second round of
New Exploration & Licensing Policy (NELP). Of these 8 are in deep water off the West Coast, 8 are in shallow water (5 off the West Coast & 3 off the East Coast) and 9 inland. FOR THE FIRST TIME DEEP WATER BLOCKS OFF THE WEST COAST ARE ON OFFER.
Of the 25 Blcoks offered under the First round of NELP 23 have already been signed up.
MULTIMODAL TRANSPORTATION OF GOODS ACT 2000 (amended) HAS COME INTO FORCE. IT PROVIDES A LEGAL REGIMEN TO GOVERN THE LIABILITIES AND RESPONSIBILITIES OF A MULTIMODAL TRANSPORT OPERATOR PROVIDING SERVICES UNDER A SINGLE DOCUMENT . THIS BRINGS THE ACT IN LINE WITH UNCTAD/ICC RULES
From June 2001, Thermal Power
Plants in environmentally sensitive areas should use Coal with ash content not exceeding
34%.
Amongst various reasons, it is essentially to reduce quantum of ash disposal as mandated
by MOEF (Ministry of Environment & Forests).
Coal import and blending can be expected to increase.
100% foreign equity is now allowed in Petroleum Refineries, Power Sector and E-Commerce (B to B) ventures.
Earlier, 26% was the cap for Refineries and Ecommerce. The 1500 Crores Rupess ceiling for Power generation, transmission and distribution is also abolished.
ECBs (External Commercial Borrowings) have been used further by allowing: